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ARIZONA HOUSE OF REPRESENTATIVESFifty-fifth Legislature Second Regular Session |
Senate: FIN DPA 9-0-1-0 | 3rd Read 29-0-1-0 |
SB 1269: conformity; internal revenue code
S/E: school finance; revisions
Sponsor: Senator Leach, LD 11
Committee on Appropriations
Summary of the Strike-Everything Amendment to SB 1269
Overview
Establishes the state student funding formula (state formula) and details funding, tax levy and budget calculations for charter schools and eligible school districts. Modifies the standard school finance formula (standard formula).
History
One of the primary components of the standard formula is the equalization base. The equalization base is the calculation that determines state funding to school districts and charter schools. Furthermore, the equalization base serves as the expenditure limit for a school district. For a school district, the equalization base is the sum of the lesser of the district support level (DSL) or revenue control limit (RCL) and district additional assistance (DAA) (A.R.S. § 15-971).
Both the DSL and RCL are calculated using the base support level (BSL) (A.R.S. § 15-947). The BSL is calculated by multiplying weighted student count, a base level amount annually adjusted by the Legislature and amounts for teacher compensation and experience (A.R.S. § 15-943). However, to calculate the DSL, the BSL is added to the transportation support level (TSL). The TSL is a statutory formula that calculates a school district's transportation funding by multiplying a statutorily set amount by a school district's approved daily route mileage per eligible student and adding other additional amounts (A.R.S. § 15-945). To calculate the RCL, the BSL is added to the transportation revenue control limit (TRCL). The TRCL is a voluntary program that allows school districts to assess an additional property tax levy to generate revenue for transportation costs above the TSL (A.R.S. § 15-946).
A school district's equalization base is first funded through the qualifying tax rate (QTR) and the state equalization tax rate (SETR) (A.R.S. §§ 15-992, 15-994). The QTR is adjusted by the Legislature annually according to truth in taxation laws and is levied by the school district (A.R.S. § 41-1276). If the QTR and SETR are insufficient to fully fund the equalization base, the difference is funded through basic state aid, which comes from the state General Fund (A.R.S. § 15-971).
Like a school district, a charter school generates an equalization base. However, unlike a school district, a charter school cannot generate local tax revenues. Consequently, a charter school is funded entirely through basic state aid. The equalization base for a charter school is calculated by adding the BSL and charter additional assistance (CAA) (A.R.S. § 15-185).
Provisions
State Formula
1. Creates the state formula for charter schools and for school districts that opt to use the state formula. (Sec. 10)
2. Instructs each charter school and school district using the state formula to:
a) Calculate a BSL as prescribed by statute; and
b) Add the BSL and state additional assistance. (Sec. 10)
3. Calculates state additional assistance at:
a) $1,935.86 per student count in preschool programs for children with disabilities, kindergarten programs and the 1st-8th grades; and
b)
$2,256.21 per
student count in the 9th-12th grades. (Sec. 10) 
4. Requires a charter school to use the state formula. (Sec. 1)
5. Designates a charter school's equalization assistance as the amount of the BSL and state additional assistance. (Sec. 10)
6. Authorizes a school district that provides instruction to pupils in any combination of kindergarten programs and the 1st-12th grades to use the state formula to determine its DSL if the school district:
a) Does not have an override in place nor owe any debt service payments on any Class A or B bonds; or
b) Does not have an override in place nor have more than four remaining fiscal years in which it is scheduled to make payments on any Class A or B bonds. (Sec. 6)
7. Requires a school district to undergo the following process to use the state formula:
a) A majority of the school district governing board (governing board) members must vote to use the state formula;
b) The governing board must call an election to determine the question of whether the school district is to use the state formula;
c) The governing board must submit the question to the school district's qualified electors as prescribed by statute; and
d) If the question is approved, the school district begins using the state formula in the next fiscal year following the election. (Sec. 6)
8. Specifies the question to use the state formula must describe the tax rate associated with using the state formula and the estimated cost of that tax rate for the owner of a single-family home that is valued at $100,000. (Sec. 6)
9. Excludes a career technical education district (CTED) from the eligible school districts that may use the state formula. (Sec. 6)
10. Prohibits a school district using the state formula from using any other property-tax generated funding other than the state formula, including funding generated by statute relating to:
a) Overrides;
b) Excess utility costs, desegregation costs, tuition costs for bond issues and costs for registering warrants;
c) TRCL;
d) Small school adjustment;
e) Adjustment for tuition loss;
f) Adjacent ways; and
g) Bond issues and bonded indebtedness. (Sec. 6)
11. Prohibits a school district using the state formula from receiving any funding from the Division of School Facilities or the School Facilities Oversight Board, except a school district may receive new school facilities funding. (Sec. 6)
12. Prevents a school district using the state formula from receiving DAA. (Sec. 6)
13. Specifies that for a common school district not within a high school district that is using the state formula:
a) The common school district is not required to pay tuition for pupils attending high school in a different school district and the school membership of these pupils is deemed to be enrollment in the school district of their attendance; and
b) Statute relating to DAA, DSL and student count for a common school district not within a high school district does not apply. (Sec. 6)
14. Requires a school district using the state formula to undergo the following process to revert to the standard formula:
a) A majority of the governing board members must vote to revert;
b) The governing board must call an election to determine the question of whether to revert;
c) The governing board must submit the question to revert to the qualified electors as prescribed by statute; and
d) If the question to revert is approved, the school district may begin to use all other available funding authorized by law in the next fiscal year following the election. (Sec. 6)
15. Prohibits a school district from submitting a question for an override or Class A or B bond along with a question to opt out of the state formula in the same election. (Sec. 6)
16. Makes the DSL for a school district that has opted into the state formula equal to the BSL. (Sec. 9, 18)
17. Makes the RCL for a school district that has opted into the state formula equal to the base revenue control limit. (Sec. 9, 18)
18. Specifies the general budget limit of a school district that is using the state formula includes the maintenance and operations portion of state additional assistance. (Sec. 18)
19. Calculates the equalization assistance of a school district using the state formula by including state additional assistance. (Sec. 20)
20. Allows a school district or charter school to use a portion of its transportation assistance or funding allocated by the state formula to provide in lieu of transportation grants. (Sec. 12)
21. Establishes the tax year 2022 QTR for a school district using the state formula at:
a) $2.1194 for a high school district or a common school district within a high school district that does not offer instruction in high school subjects; and
b) $4.2388 for a unified school district, a common school district not within a high school district or a common school district not within a high school district that offers instruction in high school subjects. (Sec. 22)
22. States the minimum QTR for a school district using the state formula and that is ineligible for equalization assistance is the applicable standard formula QTR as prescribed by statute. (Sec. 21)
23. Calculates the tax levy of a school district using the state formula as the lesser of:
a) The applicable QTR;
b) The rates prescribed by statute relating to the determination of equalization assistance; or
c) A rate equal to the school district equalization base prescribed in statute, subtracted by an amount received under specified federal funding programs and per $100 of assessed valuation used for primary property taxes. (Sec. 21)
24. Instructs a county school superintendent, for a school district using the state formula, to annually validate any requested additional primary school district tax levy amounts and levy the sum of:
a) The amount not captured by the QTR as a result of property subject to the government property lease excise tax;
b) Any legal amount not levied in the current year due to underestimated current year average daily membership (ADM) or due to a judgment made in accordance with statute for a school district ineligible for state aid and upon approval by the county board of supervisors (BOS); and
c) Any separately stated cash deficit from the prior fiscal year resulting from an anticipated or actual deviation in the property tax roll on approval by the BOS. (Sec. 21)
Standard Formula
25. Increases the base level for FY 2023 from $4,390.65 to $4,588.23. (Sec. 9)
26. Repeals statute relating to:
a) The teacher experience index;
b) Additional monies for teacher compensation; and
c) Increases in the base level. (Sec. 13, 19)
27. Eliminates CAA. (Sec. 1)
28. Increases the state support level per route mile for FY 2023 as follows:
a) From $2.77 to $3.67 for 0.5 or less approved daily route mileage per eligible student transported;
b) From $2.27 to $3.01 for more than 0.5 through 1.0 approved daily route mileage per eligible student transported; and
c) From $2.77 to $3.67 for more than 1.0 daily route mileage per eligible student transported. (Sec. 16)
29. Authorizes a school district to use a TSL amount of $330 per unweighted pupil enrolled in the school district in the prior year instead of the TSL formula amount. (Sec. 16)
30. Exempts a school district that has elected to use the per unweighted pupil amount from being required to:
a) Provide the current year odometer reading for each bus and total bus mileage; and
b) Submit route mileage or vehicle maintenance reports associated for the TSL calculation. (Sec. 16)
31. Requires a school district to annually submit a written declaration stating if the governing board voted to use the per unweighted pupil amount for the following budget year. (Sec. 16)
32. Prohibits a school district's TRCL from increasing. (Sec. 17)
33. Determines each school district's TRCL by subtracting the FY 2021 TSL from the FY 2021 TRCL and specifying that:
a) For FY 2023, the TRCL may not exceed 80% of this amount plus the TSL;
b) For FY 2024, the TRCL may not exceed 60% of this amount plus the TSL;
c) For FY 2025, the TRCL may not exceed 40% of this amount plus the TSL;
d) For FY 2026, the TRCL may not exceed 20% of this amount plus the TSL; and
e) For FY 2027 and thereafter, the TRCL may not exceed the TSL. (Sec. 17)
Achievement-Based Funding Weights (Achievement Weights)
34. Repeals the Results-Based Funding Fund. (Sec. 2)
35. Alters the definition of Group B to include students who attend schools that meet certain outlined achievement-based criteria. (Sec. 9)
36. Establishes the following Group B funding categories and support level weights:
a) AW-1 and a support level weight of 0.049;
b) AW-2 and a support level weight of 0.091; and
c) AW-3 and a support level weight of 0.111. (Sec. 14)
37. Defines AW-1 to mean a student attending a school that has:
a) An A letter grade from the prior fiscal year; and
b) Fewer than 50% of enrolled students who are eligible for free or reduced-price lunches (FRPL) or an equivalent measure. (Sec. 2, 9)
38. Defines AW-2 to mean either:
a) A student attending a school that has:
i. An A letter grade from the prior fiscal year; and
ii. At least 50% but less than 80% of enrolled students who are eligible for FRPL or an equivalent measure;
b) A student attending a school that has:
i. A B letter grade from the prior fiscal year; and
ii. At least 70% of enrolled students who are eligible for FRPL or an equivalent measure. (Sec. 2, 9)
39. Defines AW-3 to mean a student attending a school that has:
a) An A letter grade from the prior fiscal year; and
b) 80% or more of enrolled students who are eligible for FRPL or an equivalent measure. (Sec. 2, 9)
40. Specifies only students who are eligible to be included in a school's student count are to be considered in determining the school's percentage of FRPL students or other poverty indicators. (Sec. 9)
41. Outlines reporting and spending requirements for a school district or charter school that receives achievement weight monies. (Sec. 2)
Miscellaneous
42. Instructs the Arizona Department of Education to transfer 90% of the amount that would be calculated for a qualified student under the state formula, rather than 90% of the sum of the BSL and CAA, to the Treasurer for deposit into the qualified student's Empowerment Scholarship Account. (Sec. 24)
43. Incorporates two versions of statute relating to the calculation of ADM for CTEDs into a single statute. (Sec. 3)
44. Repeals statute relating to the calculation of ADM for CTEDs. (Sec. 4)
45. Makes technical changes. (Sec. 1, 3, 7, 10, 12, 17, 18, 20, 21, 22, 25)
46. Makes conforming changes. (Sec. 1, 2, 3, 5, 7, 8, 9, 11, 14, 15, 18, 21, 22, 23)
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SB 1269
Initials CH Page 0 Appropriations
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